2023 (8) TMI 1246 - AT - Customs

Custom House Agent's Penalty Upheld for Illegal Export Attempt, Reduced to Rs.50,000

V. Thiruvalagan, Proprietor of M/s. Shalom Forwarders Versus Commissioner of Customs, Tuticorin

The tribunal upheld the penalty imposed on the Custom House Agent for involvement in the attempted illegal export of Red Sanders, reducing it to Rs.50,000 ... Levy of penalty on CHA u/s 114(i) and 114AA of the Customs Act, 1962 - acts of omission and commission in relation to the attempted illegal export of Red Sanders - prohibited goods or not - HELD THAT:- It is on record that the appellant filed the impugned shipping bill without knowing and verifying the credentials of the exporter or the consignment - appellant, by accepting documents from a third party without verifying the genuineness of the exporter or the goods being exported, has facilitated the unsuccessful attempt of export of prohibited goods. Whether the above acts or omissions have been done intentionally or otherwise would not materially alter his position as an abettor in rendering these goods liable for confiscation. It is not correct position of law to say that penalty cannot be imposed under the provisions of Section 114 of the Customs Act when penalties are imposed / imposable for contravention of the Custom House Agents Licensing Regulations (CHALR). For contravention of the CHALR, the licence of the CHA may be suspended or revoked apart from forfeiture of the security deposit. However, it does not mean that penalty is not imposable under Section 114 of the Customs Act where the CHA has abetted or facilitated an illegal export or import contravening various provisions of the Customs Act, 1962. The Hon’ble High Court of Judicature at Madras in the case of M/S. SANCO TRANS LTD VERSUS THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CUSTOMS (SEAPORT-EXPORT) [2017 (4) TMI 583 - MADRAS HIGH COURT] has held that the custodian is responsible for all aspects of a transaction and provisions of Section 114 of the Customs Act, 1962 will stand automatically attracted in the event of violations by way of omission or commission of acts stated therein. The appellant has acted or omitted to do an act, resulting in rendering the exported goods liable for confiscation, thus attracting the provisions of Section 114 (i) of the Customs Act, 1962. So, penalty is imposable for his acts of omission or commission, may be deliberate or negligent. His conduct aided and facilitated the illegal attempted export of Red Sanders wood pillars and tops. The penalty upheld at Rs.1,00,000/- is reduced to Rs.50,000/- - Appeal allowed in part. Issues Involved:1. Legality of the penalty imposed under Sections 114(i) and 114AA of the Customs Act, 1962.2. Alleged abetment in the illegal export of Red Sanders by the Custom House Agent (CHA).3. Applicability of mens rea for imposing penalties under Section 114 of the Customs Act, 1962.4. Validity of the appellant's contention against the penalty.Summary:Issue 1: Legality of the penalty imposed under Sections 114(i) and 114AA of the Customs Act, 1962.The appellant, a Custom House Agent (CHA), was penalized for his involvement in the attempted illegal export of Red Sanders by M/s. Artisan's Welfare Society. The original adjudicating authority imposed a penalty of Rs.2,00,000/-, which was reduced to Rs.1,00,000/- by the lower appellate authority. The appellant argued that he did not abet the export knowingly or intentionally and that mere acceptance of the clearance work could not be inferred as abetment.Issue 2: Alleged abetment in the illegal export of Red Sanders by the Custom House Agent (CHA).The appellant contended that he accepted the clearance work at the request of M/s. Desire Global Logistics, believing it was a genuine business without violating any Customs Rules and Regulations. He claimed no knowledge of the illegal nature of the consignment. However, the tribunal found that the appellant facilitated the unsuccessful attempt to export prohibited goods by accepting documents from a third party without verifying the credentials of the exporter or the goods being exported.Issue 3: Applicability of mens rea for imposing penalties under Section 114 of the Customs Act, 1962.The tribunal held that mens rea is not an ingredient of Section 114 of the Customs Act. Mere contravention of the provisions of the Customs Act and the regulations justifies the imposition of penalty. The tribunal cited various judicial precedents, including the case of Nandu Raghunath Shinde v. Commissioner of Customs (Exports), Nhava Sheva, which stated that mens rea is not necessary for imposing penalties under Section 114.Issue 4: Validity of the appellant's contention against the penalty.The appellant relied on several judicial decisions to argue against the penalty, but the tribunal found these cases distinguishable from the present case. The tribunal emphasized that a Custom House Agent has a significant role and any deliberate actions or negligent omissions need to be dealt with sternly. The tribunal concluded that the appellant's conduct aided and facilitated the illegal attempted export of Red Sanders wood pillars and tops.Conclusion:The tribunal upheld the imposition of the penalty but reduced it to Rs.50,000/- considering the totality of the circumstances. The appeal was partly allowed.